Merkel wins German lawmakers' backing for plan to boost bailout fund - Washington Post

Speaking ahead of an emergency European Union summit meeting in Brussels, Merkel said it should not be taken for granted that "there will be peace and affluence in Europe in the next half century." Saying that Europe is facing its toughest period since the end of World War II, she called on the Bundestag, the lower house of the German parliament, to meet its "historic duty" and back her plan.

After she spoke, lawmakers voted 503 to 89, with four abstentions, in favor of her outline for increasing the power of the European bailout fund.

But a continuing deadlock in E.U. talks with banks regarding a second bailout for Greece dimmed prospects for a breakthrough at the summit later Wednesday on forging a comprehensive strategy to resolve the European debt crisis.

In her speech to parliament, Merkel said deep changes must be made to Europe's economy if the euro is to hold together as currency. But she offered few concrete details about the steps she would take to protect it.

The lingering uncertainty underlined the likelihood that the Brussels summit would fall short of achieving the comprehensive plan that Merkel and French President Nicolas Sarkozy had promised earlier this month.

"We need to act together jointly," Merkel said Wednesday. "It's not possible to have a simple solution. We will have to deal with this situation for years. . . . We have a historical obligation to fulfill."

Underscoring how many issues remain unresolved, Merkel said she would not commit any more Germany money to supporting Europe. She called for private investors to make a "large contribution" to ease Greece's debts.

European leaders have been frustrated in their efforts to craft a response to the continent's debt crisis by Wednesday's self-imposed deadline. In Italy, meanwhile, a political stalemate in Italy over austerity measures has further diminished hopes for a quick resolution.

As top European officials convened in Brussels for their second summit this week on the crisis, they sent conflicting signals about how much progress they have made on key elements of a rescue plan.

Still unsettled on Tuesday were how best to use the limited resources of a European bailout fund to help cash-strapped governments such as Greece and Italy, and how much of a loss private investors such as banks should take on their holdings of Greek bonds, which have lost much of their market value.

Adding to the uncertainty, finance ministers from euro-zone countries canceled a meeting without public explanation, deferring critical decisions to the summit of government chiefs.

U.S. Treasury Secretary Timothy F. Geithner said Tuesday that only clear, detailed steps would help convince global investors that Europe can contain its problems, which are rooted in high levels of government borrowing and have threatened to undermine the region's banking system. The debt crisis is taking a toll on Europe's economy and could trip up the recovery in the United States.